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Look out Groupon! Everybody wants to be LivingSocial

Posted on 01/31/2011

Social media websites keep popping up like wild flowers. Groupon emerged in recent years as a unique kind of social media concept. You get incentives to get your friends to set up accounts at Groupon.com. Each morning you receive an e-mail deal from Groupon, typically half off a product or service, based on your geographic location. Here’s the catch—in order for you to get the deal, enough people have to buy in so everyone can get it. So essentially Groupon gets friends talking on other social media sites, like Facebook, about products and services in their community.

LivingSocial is now on the scene utilizing a similar model. They’ve recently made a name for themselves partnering with Amazon. Here’s their story and what you, as a small business owner, can take from their recent success.

Partnering with popularity.
LivingSocial went to Amazon, part owner of LivingSocial, to make a daily deal for all markets—one day, $20 gift cards for $10, over 1.3 million sold. When you’re trying to make a name for yourself, it can be beneficial to partner with a more known and respected brand. What brands in your local market can you partner with to mutually boost your businesses?

Spending money to make money.
It is reported that LivingSocial purchased the Amazon gift cards at full price to make this deal. But now the company has 1.3 million people attached to the LivingSocial brand. Of course the gift card investment cost them, but now they’re banking on repeat customers to get a return on the marketing investment. As a small business owner, you have to think about the objectives of your marketing efforts and ensure that you can realize measurable results.

What works for your competitors…
Late last year, Groupon took in more than $11 million on a similar Gap campaign. LivingSocial decided to work with a bigger brand to get more customers. So, as a business owner, you need to keep an eye on your competitors. How are they marketing their business? How can you do it better?